Posted on 03/05/2010 6:59:03 AM PST by SeekAndFind
Out of all the economic reports, the monthly Jobs Report seems to get the most attention. This report comes out at 8:30AM EST on the first Friday of each month. Here are the main reasons why I ignore this report:
1) CNBC calls this report the "Grand Daddy of them all." This is an obvious and pathetic attempt to boost their TV ratings and put fear into the novice investor.
2) I prefer to "turn off the noise" and pay attention to the price action of leading stocks and the volume of major indexes.
3) The following seems to happen fairly often: The jobs report comes out and the Dow drops 100 points by 10AM EST. The Yahoo Finance headline reads: "Market tanks due to poor Jobs Report." By 3PM EST, the market recovers and turns positive. The Yahoo Finance headline reads: "Market rallies due to strong Jobs Report." WELL WHICH ONE IS IT??? THE REPORT DIDN'T CHANGE INTRA-DAY!!!
4) Leading indicators (such as the stock market) are more important to me than lagging indicators (the majority of economic reports).
5) How can a number have credibility when it is ALWAYS revised the next month? Could you imagine if a company reported earnings one month and then changed it the following month? When a report is revised so dramatically a month later, it makes you wonder why people think the number is "manufactured by the government."
6) Now I'm hearing that poor weather could affect the report. If you're motivated, you will walk uphill both ways in 3 feet of snow to interview for a job. If you're not motivated, you'll wake up at the crack of noon on a sunny day, eat leftover pizza and play video games. Weather is just another pathetic excuse. By the way, the same goes for Retail companies who use weather as a reason for weak sales. I know women who would walk through a category 9 hurricane if they really wanted a new pair of shoes at the mall.
7) If the unemployment number improves, the market could rally because it's a sign that the economy is getting better. It could also decline because of fears that the Fed will raise rates now that the economy is improving. Again, trying to analyze all these scenarios can drive you crazy!
Bottom line is this: The market is going to interpret the report however it wants to. If the market is healthy, it tends to ignore bad news. If we're in a weaker environment, all news is bad. My best advice is to PAY MORE ATTENTION TO YOUR STOCKS and LESS ATTENTION TO ECONOMIC STATISTICS. As they say: "There are lies, damn lies, and statistics."
If you don’t follow employment because they revise it later, how is the stock market better, when they revise that every second?
Frankly I watch the price of gasoline. If the price per gallon was in the $4 range in my area pre-crash, then that’s probably where it should be when the economy recovers. Since the price of a gallon of gas has been bouncing around $2.75 in a fairly narrow range, I’m guessing the economy is still “in the tank.” When people start going back to work & filling their tanks twice per week for their work commute, then we’ll see a rise in fuel prices.
It’s a crude method, but I think it has some merit.
I watch rail traffic. It seems up a bit from last year, but nothing like 2005.
Others watch gross shipping tonnage as a broad measure of world economic activity.
I don't know if FedEx or UPS report any shipping numbers, but that would tell you a lot about this economy.
I suppose this person ignores the weather reports as well, since it’s clear that they revise their forecasts constantly.
On item 6: This is an “employment” number, which means part of the process is counting the number of people who show up for work. If there is a blizzard during the days they do the survey, and they ask “how many people are at work today”, the number will be lower.
In 1996, there was a major blizzard, and the unemployment number was effected by close to 200,000. But nobody really knows how a particular snowstorm will effect the nunbers, because it’s all about who is surveyed when.
But it has nothing to do with people being laid off, or not looking for work. Thursday’s numbers are the weekly jobless claims report, this is the monthly “change in employment” number.
Well, we also have the once in a decade CENSUS that will effectively skew the unemployment rate down.
Gorvernment will be hiring a humongous number of TEMPORARY census takers this year which will in effect LOWER the unemployment rate.
This does not mean that the private sector is hiring again. It simply means that there is a temporary hiring phenomenon going on. But expect the positive job news as a result of this sort of hiring to be trumpeted by politicians as a positive sign that the economy is picking up.
Hey, if we really want the jobless rate to go down, why don’t we make ccensus taking a yearly activity ?
Yeah, but not 'after' the fact.
This isn’t really “after the fact” either, although the initial numbers are about things that supposedly already happened.
It’s really the same princple though. The initial reports exist because they are very helpful, and they are pretty accurate. But over time, they collect a lot more data, and can revise the initial numbers with better numbers. With the weather, what they are predicting is based on what has already happened (measurements), just as the jobs reports are. And just like the weather, the initial data as fed into the models isn’t as accurate as when they have more data (or with weather, data closer to the time you are predicting).
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